Jul 11 / Alef Dias and Ignacio Espinola

Pre-WASDE Monthly Report - 2024 07 11

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"Comments about the perspectives for USDA's report"

Soybeans: Big stocks could incentivize a stock building policy

World Ending Stocks (M mt)

Fonte: USDA, Bloomberg, Hedgepoint

Sentiment: Bearish
Expectations wise, the market is looking forward to a production number between 51-49 for Argentina, with a previous WASDE number of 50 which seems comfortable with the last news and it’s the same number than the last update.


On the Brazilian side, market’s expectations go between 155-149 with a previous report estimate of 153 M mt, which is 1 M mt less than previous update. Finally, on the US side, WASDE printed 121.1 M mt while for this report the average estimations are at 120.6 M mt with a range of 120.7-118 M mt. Ending stocks wise, we expect a number at around 9.5 Mmt for 23/24 and 12 Mmt for 24/25. This numbers, and current prices, could continue incentivizing China, who has been very active in the beans and corn market with a build stocks policy.

Finally, ending stocks wise, there’s a lot of expectation on the final world number, with last report at 128.5 M mt, and a range of 130-120 M mt. We should see a number close to 120 M mt, in line with the average estimations of the market.

Corn: Waiting for a SAM adjustment

Argentina Corn Production (M mt)

Fonte: USDA, Bloomberg, Hedgepoint
Sentiment: Bearish
For corn, the previous report was giving an estimation of 53MMt for Argentina while the latest local reports are showing numbers closer to 46-47 M mt due to the Chicharrita disease.

This decrease on the Argentina production could be offseted by an increase on the US crop, where the estimate of the market is an increase from 377,4 M mt into 383 M mt. So far, the USDA has not updated the Argentine crop and if that continues, we will still have an imbalance in the global SnD.

On the Brazilian side, the report is expecting around 122 M mt, with a market range between 125.6-120 M mt, unchanged from previous numbers but far away from CONAB’s 115.9 Mmt.

Wheat: Expectations of a bearish report

US Wheat - Production (M bu)

Fonte: USDA, Bloomberg, Hedgepoint
Sentiment: Bearish

In general terms, the July WASDE should bring more bearish figures for wheat. US wheat production in 2024/25 is expected to total 1920M bu, 45M bu higher than the 1875M bu projected in the June WASDE report. Production in the new crop year is expected to be 5.6% higher than the 1812M bu forecast for 2023/24 in the June WASDE report. This increase is mainly due to the accelerated winter wheat harvest and the excellent condition of the spring crop.

In the global scenario, ending stocks in 2024/25 are expected to total 252M mt, a slight reduction from the 252.3M mt projected in the June WASDE, according to the median of market expectations. Analysts expect ending stocks for the 2023/24 crop year to total 260M mt, down 440k mt from June's WASDE. The market will focus on Russia's production projections, after the first results since the start of the country's harvest pointed to higher-than-expected yields. Private estimates, according to a Fastmarkets survey, are between 82-86M mt, up from the 77.5-81.5M mt estimated just a month earlier, after the main growing areas suffered frosts and dry weather in May.

The USDA lowered its estimate to 83M mt in the June WASDE, down from 88M mt projected in the May edition of the report. On the other hand, the USDA may further reduce its EU production estimate due to prolonged wet weather in France, the bloc's largest wheat producer, which resulted in fewer growing days and reduced yield potential. On July 9, the French Ministry of Agriculture released its initial wheat production estimate, which predicted a 15.4% drop in production to 29.7M mt.


WASDE Commentary — Grains

Written by Alef Dias
alef.dias@hedgepointglobal.com

Written by Ignacio Espinola
ignacio.espinola@hedgepointglobal.com

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